Epicor sued after two-year project delivered 'useless' software

Wine and spirits distributor Major Brands is suing Epicor, alleging the ERP (enterprise resource planning) software vendor failed to deliver a satisfactory system after years of effort and significant cost overruns, and then offered a solution that would force the company to install a new version that hadn't yet been completed, pushing back the original "go-live" date by four years.

Chris Kanaracus
January 16, 2012

IDG News Service

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Wine and spirits distributor Major Brands is suing Epicor, alleging the ERP (enterprise resource planning) software vendor failed to deliver a satisfactory system after years of effort and significant cost overruns, and then offered a solution that would force the company to install a new version that hadn't yet been completed, pushing back the original "go-live" date by four years.

In September 2008, Major Brands began looking for a new software suite to replace some 20-year-old applications it had been using to run its business, according to the company's complaint, which was filed last week in in the US.

The older software was still "functioning in an acceptable fashion," but the St. Louis company decided that a third-party package supported by a vendor would be preferable to its existing system, which it was supporting on its own, the complaint states.

Major Brands ended up signing contracts with Epicor in September 2009. Before doing so, the company gave Epicor a detailed accounting of its business processes and transaction volumes, according to the complaint. The company also allowed Epicor personnel to "visually observe all aspects of its order entry process [so] it would understand Major Brands' needs and requirements and the processed involved."

Epicor assured Major Brands that its V9 software was up to the task, and would also be usable with the company's current hardware, with no need for a "substantial" upgrade, the complaint states.

The vendor also told Major Brands that the applications would be fully installed and running in production form by mid-2011, it adds.

In addition, Epicor served as the systems integrator on the project, and characterized the fact that Major Brands would have "one throat to choke" as a significant advantage, the complaint states.

Major Brands paid Epicor an initial fee of about US$500,000 for software license and support, and roughly $670,000 for implementation services.

The software was installed on Major Brands' hardware in November 2009, but "problems with operations, implementations and training" began almost at once, the complaint states. Epicor's application was "running so slowly that it was not going to be suitable for use," it adds.

Epicor told Major Brands that a hardware upgrade would help the performance, so the company spent about $100,000 on new machines, according to the complaint.

Meanwhile, the majority of training on the new software was supposed to be completed by April 2010, but the schedule ultimately had to be dropped due to delays in finishing "certain modifications and integrations promised in the project plan," the complaint adds.

As the year went on, Epicor told Major Brands that the project remained on track for the original "go-live" date, the complaint states. But a simulation test scheduled for July 2010 slipped to November of that year.

The simulation test performed in November "was a complete and absolute failure," according to the complaint. "During the testing, the V9 software was so ill-suited for Major Brands' needs, no invoicing or shipments were able to occur."

The main issue with the software was latency, according to the company. "Functions that could be performed in a matter of seconds under Major Brands' existing software, such as sales order entry, could take up to several minutes to perform on the V9 software." As a result of the latency problems, it was impossible to conduct comprehensive system testing, it adds.

Epicor promised it would fix the latency issues, but despite repeated efforts, it failed to do so, according to the complaint. Major Brands told the vendor in February 2011 that it was suspending future payments until the problems were resolved.

That prompted a visit from Epicor's vice president of research and development, according to the complaint.

The executive told Major Brands that it could see some improvements in performance by "'pre-loading forms,' purchasing additional servers (more hardware), and installing 'soon to be released' software patches from Epicor that would fix foundational problems in the V9 software," advice that all ran counter to Epicor's original promises, it states.

Despite the problems, Epicor continued to insist the project would go live on time, and in April 2011 Major Brands agreed to pay the vendor another $125,000.

But the latency problems persisted throughout the year, despite more efforts from Epicor, and in November 2011, Epicor "acknowledged that the V9 software was not suitable for Major Brands' needs and that it would not perform as previously represented."

Epicor told Major Brands that it would need to make "numerous changes and upgrades, including an upgraded and yet-to-be-developed computer software platform, ICE 3.0," that wasn't scheduled for completion until mid- or late 2012, according to the complaint.

All told, the revised implementation plan presented by Epicor called for a new go-live date of mid-2015 and more than $1 million in additional costs on top of the original contracts, it adds.

Major Brands' suit alleges breach of contract and negligent misrepresentation on the part of Epicor, which resulted in software and services that were "absolutely useless." The company is asking for assorted damages and restitution, as well as for the contracts between itself and Epicor to be rescinded.

An Epicor spokeswoman didn't immediately respond to requests for comment last Friday.

The case is just the latest of its type to become public. But there seems to be a key difference between it and others since it largely comes down to the software's speed, or alleged lack thereof, according to one observer.

Often, ERP project lawsuits centre on "mismatched expectations" about how well the software fits a customer's business processes, not performance issues, said Michael Krigsman, CEO of Asuret, a consulting firm that helps companies run successful IT projects. "That makes this case different than most of them."

There are two sides to every story when it comes to such disputes, Krigsman added.

"I can't wait to see Epicor's response because given the fact that Epicor was the sole implementer and the sole supplier of the software they clearly had responsibility to create a functioning system," he said. "Major Brands' claims, without knowing the other side, seem reasonable. So one wonders how Epicor is going to respond."